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Mint
04-07-2025
- Business
- Mint
Rising Treasury yields, supply to push Indian long-term bond yields higher
MUMBAI, July 4 (Reuters) - India's long-term government bond yields are likely to move higher in early trades on Friday, tracking U.S. Treasury yields, while debt supply of long-term notes will further test investor appetite. The rise may be capped and short-term bond yields may ease after the central bank did not raise the quantum of liquidity it aims to withdraw from the banking system, as some traders had expected. The yield on the benchmark 10-year bond is expected to trade between 6.28% and 6.33%, a trader at a private bank said, after closing at 6.2875% in the previous session. The five-year 6.75% 2029 bond ended at 5.9587% on Thursday. New Delhi will sell 160 billion rupees ($1.87 billion) each of a new 15-year bond and a 40-year paper on Friday, at a time when demand for long-term bonds has not been very strong. U.S. Treasury yields rose on Thursday and ended 15 basis points higher than the lows hit earlier in the week. Yields rose after data showed the U.S. created more jobs than expected in June, supporting the Federal Reserve's patient stance on cutting interest rates. The probability of a rate cut from the Fed in July tanked to 5%, from 25% before the data, with 33% chances that the Fed maintains status quo in September as well. "People were not expecting this, and we would see a reaction in the long-end, while supply will compound the selloff," the trader said. On the other hand, the Reserve Bank of India did not raise the quantum of its seven-day variable rate reverse repo from last week, even as most were expecting a rise, and this could bode well for the shorter end of the yield curve, traders said. RATES India's overnight index swap rates are likely to see paying pressure, led by the longer-end. The one-year OIS rate ended at 5.51%, while the two-year OIS rate was at 5.46%. The liquid five-year ended at 5.65% on Thursday. KEY INDICATORS: ** Brent crude futures were 0.3% lower at $68.60 per barrel after easing 0.5% in the previous session ** Ten-year U.S. Treasury yield at 4.3400%; two-year yield at 3.8822% ** India to sell sovereign bonds worth 320 billion rupees ** RBI to set underwriting fees for 320 billion rupees of sovereign bond auction ** RBI to conduct seven-day variable rate reverse repo auction worth 1 trillion rupees ($1 = 85.4570 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Ronojoy Mazumdar)
Mint
01-07-2025
- Business
- Mint
India bonds to see a muted start to quarter
MUMBAI, July 1 (Reuters) - Indian government bonds are expected to have a muted start to the quarter on Tuesday, as investors would await fresh cues after yields crept up in June, breaking a three-month declining streak. The yield on the benchmark 10-year bond is expected to trade between 6.31% and 6.33%, a trader at a private bank said, after closing at 6.3241% in the previous session. The five-year 6.75% 2029 bond ended at 6.0013% on Monday. Shorter-duration bonds outperformed their longer-duration counterparts for a second straight quarter in April-June, with the five-year bond yield plunging by 45 basis points, outpacing the 10-year bond yield that fell 26 bps. "Whatever we witnessed in April-June is definitely not going to be repeated, as the scenario has completely changed and the Reserve Bank of India has moved to liquidity withdrawal mode, instead of infusion," the trader said. The RBI conducted a seven-day variable rate reverse repo on Friday, withdrawing 850 billion rupees ($9.9 billion) from the banking system which contributed to pushing up overnight rates. The focus would remain on any follow-up action from the central bank this week, which will give more clarity on its comfort with liquidity and rates. Demand may also remain impacted as the government did not announce a tweak to the debt supply pattern, which some investors had anticipated. Indian states aim to borrow 2.87 trillion rupees through sale of bonds in this quarter, lower than the around 3 trillion rupees the market had expected. States sold more than 2 trillion rupees of bonds in April-June. RATES India's overnight index swap rates are likely to remain stable on Tuesday after declining in the previous quarter. The one-year OIS rate dropped 50 bps in April-June to 5.54%, while the two-year OIS rate declined 33 bps to 5.51%. The liquid five-year was at 5.71%, down 20 bps. KEY INDICATORS: ** Brent crude futures were 1.8% lower at $66.40 per barrel after easing 0.2% in the previous session ** Ten-year U.S. Treasury yield at 4.2163%; two-year yield at 3.7233% ** Indian states aim to raise 181 billion rupees via sale of bonds ($1 = 85.6610 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Ronojoy Mazumdar)
